Spring Conference Supplier Showcase Lean Principles and

Spring Conference & Supplier Showcase Lean Principles and Sustainability (Purchasing too) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Robert Menard Author of You’re the Buyer- You Negotiate It! and Green Purchasing and Sustainability © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Workshop Tour HOW Purchasing, Lean, and Sustainability interconnect Tips, techniques, and practices Speak up to participate NOT dive deep into theory Spot exercises © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Value of Purchasing Nothing happens until a sale purchase is made The contribution of purchasing to profit dwarfs that of sales… Purchasing is the most efficient profit generator in business. (p. vii) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Cost Reduction &Profit (p. vii) Material Sales 10% Costs 10% $1, 000 $1, 100, 000 $1, 000 $450, 000 $495, 000 $405, 000 Labor Total Profit Effect $450, 000 $900, 000 $100, 000 Base $495, 000 $405, 000 $990, 000 $810, 000 $190, 000 Plus 10% Plus 90% © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Does Price = Cost ? (Chap. 2) The cord on the right was a price bargain … until a few seconds ago! Best Value = lowest TCO © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Lean = Waste (Cost) Reduction JIT - father of Lean (? ) Six Sigma – 4 defects per million TQM – W. Edwards Deming ISO - family of standards © Robert Menard MCMLXXXV-MMXIV, all rights reserved

The Five Principles of Lean 1. Value to customer 2. Identify processes 3. Enhance/shrink flow 4. Less WIP 5. Kaizen © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Major Contributors Ben Franklin Eli Whitney Henry Ford © Robert Menard MCMLXXXV-MMXIV, all rights reserved Kiichiro Toyoda

8 Wastes of Lean The “extra” one © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Examples Waiting: Process mapping Motion: WIP, down time, ROBOTICS Defects: Six Sigma, TQM Talent: Educatiion and Trainig Overprocessing: Diminishing returns Overproduction: SOP © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Inventory Just In Time (JIT) Vendor Managed Inventory (VMI) Vendor Owned Inventory (VOI) ABCs: 5%, 20%, 75% SKU LOC: Parts by venue Optimization: Unexpected, predictable and seasonal demand © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Transportation Supplier selection: HOW? Define “Delivery” (p. 360 Law) Define FOB, origin, destination Define FAS, origin, destination Inbound/Outbound (? ) Fuel & Productivity: UPS (p. 42) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Spot Exercise If you are pursuing Lean: 1. What has prompted Lean? 2. What are your initiatives? 3. How do you measure results? If you are new to Lean: 1. What are your motivations? 2. What are your goals? 3. Which are the most likely successes? © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Sustainability 1. People, Planet, Profitability 2. Social, Environmental, Financial 3. Economical, Educational What is your definition? © Robert Menard MCMLXXXV-MMXIV, all rights reserved

The Five Values of Sustainability 1. Energy 2. Reduce/Reuse/Recycle 3. Construction & Facilities 4. Chemical & Environmental 5. CSR © Robert Menard MCMLXXXV-MMXIV, all rights reserved

How? Pick a Lean/Sustainable project • How does it relate to Purchasing • How is it Lean • How is it Sustainable • How will it reduce costs • How will you implement it? © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Rank “How-to”s Energy (p. 28) Fuel 9 Electricity 8 Btu value Approx. unit price Btu/$ 3, 413/k. Wh $0. 12/kwh Utility 28, 500 Oil #1 (kerosene) 135 k/gal $2. 75/gal by C/L 49, 100 7 Gasoline 125 k/gal $2. 50/gal by T/L 50, 000 6 Propane 91. 5 k/gal $1. 75/gal by T/L 52, 300 5 Oil #2 (diesel) 140 k/gal $2. 25/gal by T/L 62, 200 4 Oil #6 (industrial) 150 k/gal $2. 00/gal by T/L 75, 000 3 Wood (average) 16 Mil/cord $200. 00/cord by T/L 80, 000 2 Natural Gas 100 k/Mcf $12. 00/Mcf by P/L 83. 300 1 Coal (anthracite) 22 Mil/ton $50. 00/ton by C/L 440, 000 © Robert Menard MCMLXXXV-MMXIV, all rights reserved

“How-to”s Electricty E = IR (Ohm’s Law, (p. 22) E x I = Watts (Power) • 120 V (house), 120 W bulb, Amps = ? Heat loss (high V, X-frmrs) Rebates (p. 24) Demand, soft starts (p. 23) Solar, LED, Energy Star (Kohls, p. 109, many others) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

“How-to”s 3 Rs (p. 63) 1, 000 catalogs @ 2#/each • 34 -62 trees • 14, 000 gallons water • 920 gallons oil • 1, 180 lbs of GHG emissions • 6 CY landfill waste • 8, 200 k. Wh energy © Robert Menard MCMLXXXV-MMXIV, all rights reserved

“How-to”s 3 Rs COST 1, 000 catalogs @ 2#/each • 50 trees @ $15/ea = $375 • 14 k gal water @$0. 25 = $3, 500 • 920 gal oil @ $2. 00 = $1, 840 • 1, 180 lbs GHG @ $1 = $1, 180 • 6 CY landfill @ $500 = $3, 000 • 8, 200 k. Wh @ $0. 12 = $984 TOTAL $10, 879 © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Water (pp. 77 -81) Gray, Runoff, Rain, Process, . . . • • • Xeriscaping (irrigation) In situ collection (fire, process) Pervious pavement Low Impact Development (LID) Retention/Detention ponds Cooling, 3 R-ed, © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Heat Waste heat • Compressors • Process heat Infrared • Heats maass, not air • Ideal for production lines HVAC, econo-miser Lighting – Home Depot (P. 91) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Corp. Social Responsibility Wal-Mart (pp. 125 -129) leader Mc. Donalds (p. 132) The Limited (p. 133) Data Centers (p. 136) • Is print or digital more sustainable? (Hmmm) Writing the Green Purchasing Plan (Chap. 7) © Robert Menard MCMLXXXV-MMXIV, all rights reserved

Thanks! Robert. Menard@Robert. Menard. com www. Robert. Menard. com Robert. Menard © Robert Menard MCMLXXXV-MMXIV, all rights reserved